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Posted at 12:33 PM ET, 08/15/2011

Google opens its wallet for Motorola Mobility


A Motorola Mobility Xoom tablet is shown at Google headquarters in Mountain View, Calif. (Paul Sakuma - AP)

The tech world awoke Monday morning to the news that Google is planning to acquire handset maker Motorola Mobility for $12.5 billion in cash. The surprise move is perhaps the clearest signal yet that the worlds of the traditional Internet and the mobile Internet are colliding like never before. As Larry Page pointed out on the Google blog, the move will “supercharge" the Android operating system and give the company access to Motorola’s vast patent trove. Most importantly, it will enable Google to ready its defenses for the arrival of one of the most anticipated product launches of this year: Apple’s iPhone 5.

There’s a reason why Google was willing to pay 63 percent premium to acquire Motorola with cold, hard cash: The iPhone 5 is set to hit stores within the next 60 days, and judging from the early hype coming from Apple fans and mobile experts alike, this next iPhone will have the types of game-changing new features that will make it one of the “must-have” tech products of the year. One of those features is the rumored ability to make payments directly from the iPhone via NFC (Near-Field Communications) technology.

This is not an insignificant point, since one of the biggest initiatives ahead for Google is the launch of Google Wallet, which essentially gives mobile users the ability to make payments directly from their mobile devices. That’s a big deal, since Google Wallet is essentially a takeout move on major financial services providers. Google’s Eric Schmidt earlier this year called “tap and pay” NFC technology one of the company's leading areas of focus, and it’s clear why: The ability to become the middleman for millions — if not hundreds of millions — of mobile payments via mobile devices fitted with NFC technology is a very obvious way to monetize Droid devices connected to the mobile Internet.


A Google homepage is displayed on a Motorola Droid phone in Washington August 15, 2011. (KEVIN LAMARQUE - REUTERS)
The Motorola deal also gives Google an opportunity to create the same kind of mobile ecosystem that Apple was able to create around the iPhone — an ecosystem that includes mobile devices, an operating system, and content. The acquisition of Motorola gives Google a way to create a similar type of mobile ecosystem. It enables Google to link together the world of hardware and software in a way that has never been possible for the company before. While Android, unlike Apple’s mobile platform iOS, will remain an open platform for developers, it’s clear that Google now has an inside track on guiding the development of the types of mobile devices that can best support its most important new initiatives, like Google Wallet.

Look for more focus from Google on Google Wallet as it shuts down its focus on side projects (Google Labs, anyone?) and doubles down on the types of game-changing initiatives that will enable the company to remain one of the most innovative, competitive companies in the technology world. The impact of the Google-Motorola deal appears to be so significant that it could put other mobile players like Blackberry-maker Research in Motion (RIM) or Nokia into play, as other tech companies prepare for the invasion of the Google Droid army.

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By  |  12:33 PM ET, 08/15/2011

Categories:  Business, Dominic Basulto, Technology

 
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